The Clap The FRA has approved the issuance of the first future flow securitization.
Background In May 2022, CIRA announced its intention to issue a new type of securitization in order to find a new way of financing the company. They were pending approval from the FRA in order to use this instrument.
The Deets The total value of this issuance will be EGP 2 billion for 3 years, with the part of the issuance set to be worth EGP 800 million.
What is future flow securitization? In a future flow securitization, a company pools together future inflows into one debt instrument that they can sell to the public in order to raise funds. The company pays back the debt through future receivables.
Why is this important? This approval allows a new way of raising funds for businesses in Egypt. This securitization gives more variety to the financial instruments that can be used to generate funds.